Boeing's safety vs. cost-control culture may be what sent out fatal aircraft | Hacker News Reader

Boeing's safety vs. cost-control culture may be what sent out fatal aircraft

cbc.ca

82 pointspseudolus25 comments

This sounds damning:

>At the climax of the hearing, however, he had trouble explaining what was done about an internal FAA study showing that there would be over 15 crashes of 737 Max aircraft with 2,920 likely fatalities if the MCAS system was not fixed. That study was completed over three months before the Ethiopian airliner crashed.

>In his appearances before Congress, then-Boeing chief executive Dennis Muilenburg couldn't explain other internal documents that showed the company was aware long before either crash of the flaws in the MCAS system that lead to the tragedies.

>One engineering study showed that pilots would have only four seconds to recognize a problem with the flight-control system, and only 10 seconds to respond to it, otherwise there would be a "catastrophic" crash.

Where are the criminal charges, and if this is not a crime, why it is not?

How on earth is that not a criminal charge????

Even when the cat is out of the bag, national/political agendas are stronger than any criminal charges.

Hundreds if not thousands knew damn well what was/is going on, and just like before the crashes they are "sorry" for the whole situation but they are also just trying to cover their ass which in turn will not solve any problem and the cycle continues.

Because CEOs decide who gets campaign donations?

Bribing is bad. Lobbying, that is completely ok, because that's a lot of money.

Lobbying isn't bad; you're lobbying if you call or write your congresspeople. Even paid lobbying isn't so clear cute: are you part of any organization you donate to or just pay dues to that sends anyone to DC to talk to congresspeople about the issue the organization care about?

There is a problem, but blanket statements like your comment only work to stir the pot without offering any real critique or alternative. There are many, many problems with our current system of political communication, but many of the calls to "remove money from politics" and "stop lobbying" completely overlook that those are the means by which the average citizen also participates in political discourse. Moreover, since every citizen cannot possibly talk to their congresspeople people about the details of every possible subject relating to issues they care about, groups of people need to be able to effect change as well as the individual.

This but also something else: Boeing and its suppliers are huge employers and a major part of America's industrial base.

It's the same rationale behind bailing out the banks and letting their bad behavior slide: "national security." It's believed by many that it's better to let our own failures slide than to potentially lose dominance in a sector.

I understand the logic behind wanting to preserve Boeing as a company due to it's economic importance. But I don't understand the need to preserve any ownership by the current stock or bond holders. When the CEO has such negligent disregard for human life on an industrial scale, as may have occurred in this case, it seems that the stock holders at the very least should be exposed to more serious losses.

Expertise is power. The people who own, control, and operate Boeing are... well... the ones who run Boeing. It's extremely difficult to clean house at the top without losing the entire structure. It's like how it's hard to fire the one IT guy who knows how everything is configured.

Look for example at what happened to Venezuela's oil industry when the Chavez regime tried to eliminate its current heads and nationalize it. Oil production crashed. The new people running the system didn't know how to run it, and there is a substantial learning curve. This was part of what set the stage for Venezuela's current economic and political disaster.

Corruption aside (and I do think corruption is a factor) this is the most likely rational explanation for this behavior.

> Where are the criminal charges, and if this is not a crime, why it is not?

My dad used to be a executive at a large company and I remember he was occasionally called to court and he (and all the other executives) had to carry massive personal liability policies incase they were ever personally sued for their decisions. I suspect there will at least be some personal lawsuits if there are no criminal charges. I think there will be criminal charges but I believe it's probably very early in the investigation as the evidence is still coming out and it's going to take a lot of time to see how wide and how deep this goes.

> he (and all the other executives) had to carry massive personal liability policies incase they were ever personally sued for their decisions

If it's anything like the large companies I've had experiences with, the company covered the cost of these personal liability insurance policies entirely.

The wheels of justice don't move at the speed of the internet. Prosecutors generally like knowing they're going to secure a conviction before they actually prosecute.

Congressional hearings are not a court of law. So I would imagine some prosecutor somewhere is actually working on it, but talking about how you're working on a case publicly is a great way to let defendants know that it's CYA time.

> The revelations are just the latest in a parade of evidence pointing to the decade-long civil-war inside Boeing, pitting its famed "safety culture" against financial performance of the kind that pushes the stock price higher and provides big bonuses for senior executives.

As far as those senior executives are concerned, said strategy was a financial success. They got their big bonuses. What happens to the company years later doesn't matter.

Which is why we need to change how compensation works. Large salaries and bonuses should be paid out in corporate stock over a period of years. At the time it was awarded it would be a set number of shares (subject to splits and the like) but paid out over time. That ties their income to the long term performance of the company, not the short term results.

That's...pretty close to how top executives currently get paid.

The question is, does that pay mechanism actually result in tying compensation to the long term performance of the company? Will Boeing's executives come out ahead even after all the destruction they've caused?

If so, we still have moral hazard: executives are incentivized to chase short-term gains at the expense of long term company health.

The CEO just left with a $62M golden parachute.

I don't know why I'm only now realizing how apt the "parachute" metaphor is in this case.

One key difference: "over a period of years". Current they get stock options they can exercise if the share price is over the strike price. I'm saying to give them actual shares over a period of time--what they end up getting is based not only on the current performance, but what it is 5 or 10 years down the road.

Capitalism is very good at incentivizing externalizing costs: the environment, healthcare of its workers, etc... You need government to fix that because the market by itself sure isn't.

Of course capitalism isn't all bad. There is a lot of good that can come out of it too.

> What happens to the company years later doesn't matter

In finance, bonuses are now subject to claw backs.

Is this true for Boeing?

In Wells Fargo's case, even after clawbacks, John Stumpf and Carrie Tolstedt ended up tens of millions of dollars ahead.

The idea that clawbacks could be used seems to be a justification to keep executive pay at present levels. Even though executives who destroy their companies clearly are not worth what they are being paid.

>>"McDonnell Douglas managers were more cutthroat, and it was all about the bottom line — cut those costs!" she told CBC's The Fifth Estate. "They didn't follow a good capitalist model. They followed greed and putting people in the upper echelon, putting their interest first above the workers and the product and just society as a whole."

This type of financialization of a business works great -- right up to the moment when it doesn't.

All the numbers just keep looking better and better

Then, even without disasters that kill hundreds of people, the business starts to become sick, and there is often no cure for it.

The core product or service has been so long neglected, and the the know-how to continuously develop it has become so diluted, that there is nothing left but the long death spiral.

In this case, that death spiral may be halted by the govt due to Boeing's large defense role, but...

The idea of free market is that public companies have financial incentives to produce safe products. If they produce an unsafe product, their market capital should suffer. This hasn’t happened to the extent I expected with Boeing. Is the market working as intended?

Of course it hasn't happened to Boeing. There's no one else in their Civil Air Transport niche, and you'd be a fool to bet against a company with as much established Government business as Boeing.

Overconsolidation has neutered the competitive landscape for airliner design and manufacture.

Thino of a Government contract as a big fat insurance policy against free market forces. Add in a multiplier for being the only shop left in the country in certain verticals, and you'll find Adam Smith turning over in his grave as the market is paralyzed at the thought of putting down it's golden goose that has taken to laying hand grenades.

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